circuit breaker

On Wednesday, The Washington Post Co. became the first U.S. company to have trading of its stock halted by Securities and Exchange Commission circuit breakers imposed following the May 6 market crash.

Why do time-outs on stock trading make sense? A simple manual cross-check of prices can help mitigate volatility "if things get out of whack," says Doreen Mogavero of Mogavero Lee & Co. in a video interview from the NYSE.

Aiming to avoid another "flash crash," federal regulators on Thursday approved new "circuit breaker" rules that would briefly halt trading of some stocks that make big, rapid swings in value.

Any S&P 500 stock that has a 10% swing within five minutes would get a timeout, with trading in it paused for five minutes across all domestic equity markets. That last point is key.